Unfair trade charges rejected against gold importing agencies

The Competition Commission has rejected allegations of unfair trade practices made against 15 entities, including government and public sector enterprises, with regard to allocation of imported gold.
The complaints against Ministry of Finance, Ministry of Commerce & Industry, RBI and Directorate General of Foreign Trade (DGFT) and 12 government appointed agencies for import of gold have been rejected.
These agencies are MMTC Ltd, STC of India, PEC Ltd, Handicrafts and Handloom Exports Corporation of India, Nova Scotia, Kotak Mahindra Bank, IndusInd Bank, YES Bank, HDFC Bank, AXIS Bank, Punjab National Bank, State Bank of India.
It was alleged that the entities had abused their dominant market position by not enrolling and allocating the imported gold among jewellers and gold traders in a transparent and fair manner.

Finding no prima facie case of fair trade norms violations, the Competition Commission of India (CCI), in an order released today said the entities were "not exclusively engaged in trading of gold, rather trading of gold is a part of their overall activities".
"It may be noted that trading of physical gold is not only done by these nominated agencies but also by the dealers, gold jewellery manufacturers and retailers whose activities are primarily confined to trading of gold," CCI said.

"Since, prima facie, none of the opposite parties appear to be in a dominant position in the relevant market, the question of abuse of dominant position by them under the...Act does not arise," it added.

Further, the Commission observed that there was "no information available on record to suggest any kind of agreement or collusion among the opposite parties in regards to allocation/distribution of imported gold which can be termed as anti-competitive".
The complaint filed by Sri Guru Jewels and Tushar had alleged that the government nominated agencies were either not enrolling applicants interested in allocation of imported gold or were enrolling them but not allocating the metal to them.
As per RBI policy, nominated agencies are required to ensure that at least 20 per cent of every lot of imported gold is exclusively made available for the purpose of exports and the balance for domestic use against full upfront payment.

Further, the nominated agencies have to make available gold for domestic use only to entities engaged in jewellery business, bullion dealers supplying gold to jewellers and to banks authorised to administer 'Gold Deposit Scheme'.
The complainants had submitted with CCI that the agencies including banks had exclusive right to control the supply and distribution of imported gold among the jewellers and gold traders in the domestic market.
The jewellers and gold traders interested in imported gold are required to enrol themselves with the agencies which would then issue the metal against full upfront payment.